Document of The World Bank FOR OMCLAL USE ONLY Report No. 11419 PROJECT COMPLETION REPORT 'MICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2191-ME) DECEMBER 10, 1992 Agriculture Operations Division Country Department II Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit Mexican Peso (Mex$) Currency Exchange Rates during Implementation: (yearly averages) (Note All USS values in this report should be understood as USS equivalents.) Year Mex$/US$ 1979 (SAR) 22.50 1980 23.01 1981 24.48 1982 48.01 1983 120.06 1984 167.64 1985 228.11 1986 575.40 1987 1353.70 1988 2281.00 1989 2464.00 1990 2821.00 1991 2950.00 FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation December 10, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Mexico San Fernando Rainfed Agricultural Development Project (Loan 2191-ME) Attac(hed, for information, is a copy of the report entitled "Project Completion Report on Mexico - San Fernando Rainfed Agricultural Development Project (Loan 2191 -ME)" prepared by the Latin America and Caribbean Regional Office, with Part II contributed by the Borrower. The objective of this project was to increase agriculture production through new drainage and land reclamation. Completion levels for project components was over 95% and expansion of the cultivated area (about 0.4 million ha) was very close to plans. The project is having a significant impact on the commercial, social and natural environment of the region. The project was completed well below cost because of overestimation of unit prices, Mexican Peso devaluation and private sector implementation of several components included in the original design. The reestimated rate of return (24%) exceeds appraisal level (18%). Thus, the project outcome is rated as highly satisfactory. For the sustainability of the project to be fully assured there is a need for less dependence on sorghum and for alternative crop mixes to be developed through research. Continued maintenance of the infrastructure, and further expansion of agribusiness in the area will also be required. The PCR is of high quality. An immediate audit is not planned. When the follow-on San Fernando II is completed, both projects may be audited. Attachment This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY ABBREVIATIONS ANDSA - National Agency for Storage Facilities BANRURAL - National Bank for Rural Credit CIAGON - Agricultural Research Center for the Northeast Region CNA - National Water Commission (Comisi6n Nacional del Agua) CONASUPO - National Marketing Corporation for Basic Foodu DT - Distrito de Temporal (Rainfed District) FICAR - Trust Fund for Credit in Irrigated Areas FIRA - Agriculture Trust Funds of the Bank of Mexico GOM - Government of Mexico INIFAP - National Institute for Forestry, Crop and Livestock Research ICRISAT - International Crops Research Institute for the Semi- Arid Tropics M&E - Monitoring and Evaluation NAFINSA - Nacional Financiera, S.A. PCR - Project Completion Report PLANAT - National Plan for Rainfed Agricultural Development PROCATI - Producer Organization, Training, Extension and Research Project PRODERITH - Program for Development of the Humid Tropics SAP - Special Assistance Program SAR - Staff Appraisal Report SARH - Secretariat of Agriculture and Water Resources SPP - Secretariat of Programming and Budgeting USDA/SCS - United States Department of Agriculture -- Soil Conservation Service This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. PROJECT COMPLETION REPORT MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2191-ME) TABLE OF CONTENTS Page No. PREFACE . ......................................................................... i EVALUATION SUMMARY .............................................................. iii PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE ........................... 1 1. Project Identity ............................................... 1 2. Project Background ............................................. 1 3. Project Objective and Description .............................. 1 4. Project Design and Organization ................................ 2 5. Project Implementation ......................................... 4 6. Project Results ................................................ 7 7. Project Sustainability ......................................... 8 8. Bank Performance ............................................... 9 9. Borrower Performance ........................................... 11 10. Project Relationship ........................................... 12 11. Consulting Services ............................................ 12 12. Project Documentation and Data .................... . . ............ 13 PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE ......................... 15 1. Introduction ................................................... 15 2. Bank Performance ............................................... 15 3. Government Performance ......................................... 15 4. Results Achieved ............................................... 16 5. Recomnendations and Lessons Learned ............................. 17 PART III: STATISTICAL INFORMATION . . . ......................................... 19 Table 1: Related Bank Loans ....................................... 20 Table 2: Project Timetable ........................................ 21 Table 3: Loan Credit Disbursements ................................ 23 A. Cumulative Estimated and Actual Disbursements ............ 23 B. Annual Financed Expenditures ............................ 24 C. Cumulative Financed Expenditures by Investment Category .................................. 25 Table 4: Project Costs and Financing ............................... 27 A. Project Costs .......................................... 27 B. Project Financing ...................................... 28 C. Main Project Cost Figures .............................. 29 Table 5: Project Results ........................................... 31 A. Direct Benefits ........................................ 31 B. Agricultural Production Benefits ....................... 32 C. Support Data for Benefit Stream ........................ 33 D. Economic Analysis ...................................... 34 E. Financial Analysis ..................................... 35 F. Internal Rate of Return ................................ 36 Table 6: Status of Legal Covenants .................................. 37 Table 7: Use of Staff Resources .................................... 38 A. Staff Inputs ........................................... 38 B. Missions ............................................... 39 Table 8: Land Tenure Status and Use ................................. 40 A. Land Tenure Area ...................................... 40 B. Land Tenure by Families ............................... 42 C. Land Use Pattern ...................................... 43 Table 9: Studies ................................................... 45 IBRD 16100 PROJECT COMPLETION REPORT MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2191-ME) PREFACE This is the Project Completion Report (PCR) for the San Fernando Rainfed Agricultural Development Project in Mexico, for which Loan 2191-ME in the amount of US$138.4 million equivalent was approved on September 5, 1982. The loan was closed on December 31, 1990, two years behind schedule. Only US$22.6 million of the loan was disbursed and the last disbursement was on December 1, 1986 to the Special Account; US$115.8 million was canceled by the Borrower. The PCR was jointly prepared by the Agriculture Operations Division, Country Department II, of the Latin America and the Caribbean Regional Office (Preface, Evaluation Summary, Parts I and III), and the Borrower (Part II). Preparation of this PCR was started during a Bank mission in May 1991, and is based, inter alia, on the Staff Appraisal Report; the Loan. Guarantee, and Project Agreements; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda. - iii - PROJECT COMPLETION REPORT MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2191-ME) EVALUATION SUMMARY Project Objectives 1. The project was: (a) to increase productivity and crop production (primarily sorghum) on about 240,000 ha already cultivated and (b) to expand sorghum production on an additional uncultivated 164,000 ha. The implementation was scheduled to be carried out over a six-year term. It would benefit some 17,000 families, including 8,200 families that would be settled under the agrarian reform program. The incremental production of sorghum (estimated at about 544,000 tons) would be equivalent to 20% of national imports at appraisal (paras. 3.1-3.2). Implementation Experience 2. Despite several reorganizations of SARH (Secretariat of Agriculture and Water Resources) during project implementation, construction of infrastructure (drains, roads, buildings) was not adversely affected. Responsibility for operation and maintenance of the works and support services for agricultural development, which initially was with the San Fernando Rainfed District, was transferred in 1985 to three Districts of Rural Development. The division of these responsibilities among three districts made coordination more difficult, and it had the effect of weakening the administration of operation and maintenance and technical assistance to farmers. 3. On the whole, the project was successfully implemented (paras. 5.11-5.12). The principal variance between planned and actual execution was that the project was completed at a cost underrun of 60% in dollar terms (Table 4.A). Reasons for this underrun include: (a) devaluation of the local currency well above levels of inflation; (b) overestimation of unit costs for civil works; (c) decreases in the quantity of works required to achieve objectives, especially in land clearing (which was done by property holders prior to expropriation); (d) keen competition among contractors; and (e) partial implementation of construction components because of budget constraints; and (f) the completion of a significant part of project works prior to effectiveness and their non-coverage by retroactive financing. These factors led to two loan cancellations -- US$90 million in January 1985 and US$26 million two years later, totalling 83.6% of the loan (Table 4.B). 4. Despite some budget constraints, implementation generally was on schedule up to late-1987, at which time completion levels were 97% for drains, 93% for roads, and 98% for agriculture developments. A nationwide Government freeze on investments prevented completion on schedule by end-1988. Two - iv - additional years were required. Technical assistance and training of farmers was implemented satisfactorily within the constraints imposed by budget limitations and a freeze on hiring technicians. 5. Land resettlement was achieved for 4,051 new farm families, about one-half of the original target, mainly due to a reduction in expropriated land of private owners (para. 5.4, Tables 8.A and 8.B). This reduced achievement was due to the fact that under Mexican law, the previous owner could hold up to 200 ha for rainfed purposes for himself and, prior to expropriation, would also transfer 200 ha for each family member; this was recognized by the preparation team although its consequences were not. 6. Sorghum completely overshadowed all other crops ranging from 95% to 98% of total area planted between 1980 and 1990 compared to 80% planned. Small amounts of maize and beans completed the cropping pattern. With the declining profitability of sorghum, a significant amount of cotton appeared in 1991, and winter wheat has also been introduced on a small scale. The Government financed the construction of nine grain collection and storage centers (270,000 tons total capacity), although these were not funded by the loan. In addition, the private sector has built many small storage facilities in the project area. Results 7. The project achieved its objective of increasing crop productivity and production (mainly sorghum) in an area of some 486,000 ha gross. The project reclaimed an additional 150,896 ha for crop production (164,500 ha planned) bringing the total cultivated area to 396.696 ha (404,500 ha planned) and provided drainage on 358,000 ha (366,000 ha planned) (para. 6.1. Table 5.A). 8. Sorghum production was characterized by extreme annual variations due to erratic fluctuations in crop yield in response to rainfall, and so did not follow a rising yield curve beginning with 2.0 t/ha and reaching 3.6 t/ha at full development as forecast by appraisal. The actual levels of sorghum production were satisfactory but were generally lower than those estimated by appraisal (para. 6.2, Table 5.B). 9. The economic rate of return for the project was calculated by the Bank was about 23.9% compared to the SAR estimate of 182. A later exercise done by CNA on its ex-post evaluation (with additional cost items not included in the Bank SAR) estimated the ERR as 17.4% (Table 5F). 10. The project has had a significant impact on the commercial, social and natural environment in its area of influence including through: (a) all- weather roads facilitating harvesting, transportation, and growth and welfare of rural settlements; (b) drainage systems alleviating flash flooding of settlements and fields and reducing soil salinity build-up; and (c) project organization and settlements providing a stimulus to the organization of producer associations among the eiidatariosV and also to the private sector in grain storage and inputs supply (paras. 6.3-6.5). Sustainability 11. The sustainability of an acceptable level of net benefits will depend upon: (a) less dependence on the monoculture of sorghum; (b) adequate maintenance of infrastructure; (c) expansion of wind breaks and stabilizing dunes to minimize wind erosion; (d) the strengthening of adaptive research and demonstrations of alternative crop mixes and cultural practices to trap and conserve soil moisture; and (e) the expansion of agricultural processing activities (see paras. 7.1-7.6). 12. The profitability of sorghum has declined due to a dispropor- tionate rise in the cost of production compared to the value of the crop. Producers and researchers are addressing this problem through the introduction of crops such as cotton and winter wheat. The recent procurement by the National Water Commission (CNA), with Bank financing, of much needed addi- tional equipment should enhance the maintenance of the project's infrastruc- ture, as well as the newly created "Gerencia" for Drainage Districts in CNA to implement the explicit policy of transferring responsibility for maintenance to the beneficiaries of the works. Additional wind breaks are being estab- lished with seedlings through a cooperative program between SARH, the State Government, and the producers (ejido associations). 13. Businesses related to sorghum value-added activities have begun to emerge in the project area, principally private storage facilities and more recently, poultry raising. There is a real challenge for the local agricultural research station to intensify activities related to alternative crops, low-input farming systems, and soil moisture conserving practices. Promising results need to be demonstrated, in collaboration with the extension service, on a large field-scale basis to convince producers of their merit. Findinas and Lessons Learned 14. The main lessons learned from the project of relevance to such projects in the future include the need for: (a) more conservative hydrological design criteria for sizing of surface-storm drains in the Gulf area; (b) comprehensive environmental assessment during project preparation, and its subsequent monitoring; (c) giving priority to reserving land for firewood production in land clearing project. where fuel wood is scarce; (d) giving attention to operation and maintenance of infrastructure by assuring that the organization responsible for it would be strengthened in the capacity and skills to do the task; (e) in infrastructure projects with agriculture support service components, exploring with the Borrower a mechanism for assuring that loan disbursements against a particular category are reflected in the amount and timeliness of counterpart funds for that category; (f) closer attention to an assessment on the risk of droughts in " Elidatario - small farmer, member of an eiido, entitled to use a plot of land of a certain ejido. Eiido - settlement of small farmers in public lands expropriated under the agrarian reform. - vi - rainfed projects, including the desirability on focussing on high-potential areas within a large project area; (g) exploring the risk implications of having large rainfed projects concentrate on a single-crop; (h) more attention to establishing accurate yield and cost estimates; (i) establishing users' organization as a priority from the beginning of a project; (j) careful evaluation of the likely actual implementation of land reform/titling legislation; and (k) identifying potential problems in utilizing retroactive financing (para. 8.4). PROJECT COMPLETION REPORT MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) PART I - PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identitv Project Name: San Fernando Rainfed Agricultural Development Project Loan No.: 2191-ME RVP Unit: Latin America and the Caribbean Country: Mexico Sector: Agriculture Subsector: Drainage - Rural Development 2. Proiect Background 2.1 Sector Development Obiective: The objective was to accelerate agriculture production in semi-arid rainfed areas in the northern part of Tamaulipas State which has a large potential area for cultivation, estimated at about 1.0 million ha. Much of the area was either idle or used for extensive grazing. The project was considered to be a large-scale pilot project representative of rainfed areas that had not benefitted from adequate investment and which had replication possibilities in Tamaulipas and the neighboring state of Nuevo Leon. 2.2 Policy Context: The project marked the beginning of a shift in development strategy away from costly large-scale irrigation schemes towards the adoption of measures for promotion of rainfed agriculture. Production measures were to be achieved by the expansion of cropped areas and by enhanced productivity of rainfed lands through application of improved technology supported by applied research, extension services, and implementation of storm surface drainage, road networks, and grain storage facilities. 2.3 Linkage between Project, Sector and Macropolicy Objectives: The project was the second loan made exclusively for rainfed agricultural areas (the first being for tropical areas) and was in line with Government's increased emphasis on improving the productivity of farmers in such areas. Specifically, the project was closely linked to the Government's policy of encouraging sorghum production, imports of which had risen from 10,900 tons in 1970 to 2.3 million tons in 1980. The project area was identified as an area with comparative advantages for sorghum production. 3. Prolect Obiectives and Description 3.1 Proiect Obiectives: The project was: (a) to increase productivity and crop production (primarily sorghum) on about 240,000 ha already cultivated; and (b) to expand sorghum production on an additional 164,000 ha previously uncultivated. Implementation was to be over a six-year term. It would benefit some 17,000 families, including 8,200 families that -2- would be settled under the agrarian reform program. The incremental production of sorghum estimated at about 544,000 tons would be equivalent to 20% of national imports at appraisal time. 3.2 Components: The project components were: (a) land clearing on about 155,000 ha; (b) construction of a surface drainage network totalling about 884 km, together with adiacent gravel--surfaced feeder roads, to drain about 366,000 ha of which 270,000 ha are low permeability, heavy soils; (c) construction of an additional feeder roads network of 394 km with adiacent shallow drains to serve about 134,000 ha of medium to light soils; (d) purchase of necessary equipment for maintenance of the drainage and road networks; (e) construction of three operation and maintenance centers, a training center for new settlers, and an agricultural research center; (f) incremental extension services to reinforce the Rainfed District of San Fernando, including training middle-level specialists and extension agents; and (g) execution of two studies, one for grain movement and storage and the other for the feasibility to expand a second-stage rainfed development project in an area south of San Fernando ("San Fernando II"). 4. Prolect Design and Organization 4.1 The conceptual foundation of the project was sound. Sorghum, the main crop, is well adapted to the relatively low rainfall (averaging 438- 648 mm annually) in the project area. Nevertheless, some constraints to production were identified that the project was designed to overcome such as: (a) inadequate control of land flooding and soil erosion; (b) lack of suitable hydraulic infrastructure, roads and storage facilities; (c) poor use and distribution of land holdings; (d) lack of training facilities; and (e) insufficient technical information and assistance to farmers. 4.2 Initially, the reaction of the private owners of land, which was destined to be expropriated and to be distributed to new settlers in the ejido sector, was extremely negative even though the expropriations were in accordance with existing legislation. Private holdings at the time either were used for extensive cattle raising or were idle. However, opposition subsided when in early 1981, agreement was reached on the purchase prices for different types of expropriated land and land improvements, including higher compensation for cleared land, which was a stimulus for owners to clear land prior to expropriation. -3- 4.3 The project was the first attempt to implement under semi-arid conditions the Government's then new policy of promoting rainfed agriculture. Up to that time, the Government's intervention in semi-arid regions was through irrigation, including the Bajo Rio San Juan and Bajo Rio Bravo irrigation systems which bordered the project on the north. 4.4 The project was prepared by SARH's Subdirectorate of Programs and Specific Studies of the Undersecretary of Hydraulic Infrastructure. Recurring issues during project preparation centered on project size and scope, and the criteria for project design of drainage and roads. The Bank unsuccessfully urged the Government to consider a smaller project; SARH felt that this would create problems in carrying out the land reform program and reduce the efficiency of the infrastructure works and technical assistance. Also, the Bank was concerned that the feasibility study was being prepared on the basis only of a general soil survey (reconnaissance level) which began in 1978. However, new and more detailed soil and topographical surveys were under preparation at the time, and it was felt that these and the soil survey that was completed in June 1981, along with the feasibility study, were a sufficient basis for project appraisal. 4.5 The project was well prepared with the exception of cost estimates. There was an overestimation of all civil works costs both in terms of unit costs and the amount of work required, although at the time a joint review by Bank and SARH engineers found them to be in line with current prices. Also, close to one year elapsed between the Bank's two preparation missions, and final completion of the surveys mentioned above delayed appraisal until August 1981. Subsequent to appraisal, SARH introduced a major change in the project as a consequence of deciding to undertake the development of the project area in stages, concentrating in specific zones rather than in scattered separate parcels within the total area. This decision necessitated completion of final designs for specific zones, and a revision of the implementation schedule and estimated costs, which provoked further delays. 4.6 The project was organized and managed along the traditional pattern followed in Mexico at the time. All construction was carried out under SARH's Undersecretariat for Large-Scale Irrigation. Operation and maintenance of works and support services for agricultural development were the responsibility of the San Fernando Rainfed District under SARH's Directorate for Rainfed Districts. The Secretariat of Agrarian Reform in collaboration with the Secretariat for Human Settlement and Public Works and SARH were responsible for the resettlement program. The role of each of the above agencies was well defined and understood. Nevertheless, early in project implementation, the Bank recommended that SARH appoint a full-time coordinator for all aspects of the project because of the large number of executing agencies and the complex nature of the project. In response, the Minister of SARH appointed the Delegate of SARH in North Tamaulipas State as coordinator, which was not as had been originally envisioned, since the Delegates of SARH are the Secretary's representative in each state and responsible for all of SARH's actions in the state, and so are not in a position to coordinate complex projects with other federal agencies. 4.7 The roles and responsibilities of the executing agencies, however, did experience some variation from the original proposals due to reorganizations of SARH during implementation. The first project-specific change occurred when the single San Fernando Rainfed District was split up into three separate Rainfed Districts, each responsible for operation and maintenance and technical assistance within its area. Later, in 1985, a major reorganization of SARH merged the Rainfed Districts and Irrigation Districts into Districts of Rural Development. As a result, the project area fell within the jurisdiction of three Rural Development Districts, two of which also had responsibilities in adjacent irrigation systems. More recently, in early 1989, the infrastructure branch of SARH was split off into a National Water Commission (CNA). 4.8 Despite these reorganizations, the definition of roles and responsibilities of the group in charge of infrastructure construction in the project continued unaffected during project implementation. One significant change that has occurred since project completion is that a new Division for Drainage Districts (Gerencia de Distritos de Drenaje) has been created in CNA. One of its main responsibilities will be to promote and assist in the organization of user groups among beneficiaries of hydraulic infrastructure, with the final objective of these groups assuming responsibility for operation and maintenance of the works. This is viewed as a positive action. 4.9 Although the reorganization did not alter the roles and responsibilities of the Districts' participation in the project, the division of these responsibilities among three Districts made the task of coordination between the infrastructure group and the support service group more difficult, as it did the administration of operation and maintenance and technical assistance. 4.10 In retrospect, the non-vulnerability of the infrastructure construction group (originally within SARH, later CNA) to the numerous institutional reorganizations of SARH, along with the associated continuity of objectives and experienced engineers, can be considered as the main aspect of project organization that most contributed to its success. 5. Proiect Implementation 5.1 The project was successfully implemented with an economic rate of return of 23.9Z. The principal variance between planned and actual execution was that the project was completed at a cost underrun of 60Z in dollar terms. The greater part of this underrun was caused by devaluations of the local currency that were well above the levels of inflation, unit costs being overestimated and implementation of a significant part of the appraised project prior to effectiveness, and was not subject to retroactive financing. Other explanations are related to variances in some of the project's components, as follows. 5.2 During a mid-1984 detailed review of the project, the quantities of civil works required to achieve the objective within the project area of some 486,000 ha were updated and amended. Re-estimation of project costs as a result of reductions in the quantity of some works (particularly, a reduction in the area that had to be cleared, since large areas were cleared by landowners on their own account) led to a cancellation of US$90 million from the loan in January 1985, at which time inclusion of the project in the Bank's Special Action Program (SAP) with increased disbursement percentages was accepted. -5- 5.3 Two years later, a second analysis revealed that the original infrastructure targets could be achieved at still less cost. The need for the project to clear land was significantly reduced because many owners cleared the land themselves prior to expropriation. Competition between contractors during the slack years of the mid-1980s drove prices still further down. Also, some planned components of the project were only partially implemented because of budget constraints. As a result, an additional US$26 million was canceled in January 1987. The only component with a cost overrun was "rights- of-way". This component, which was 100% locally-financed, was to cover indemnification costs for land of private owners needed for construction of the drains and roads. In actuality, the figure also includes indemnities for the expropriated land as part of the land resettlement program. 5.4 Actual implementation of land resettlement also varied in that land was distributed to a fewer number of new settlers (ejidatarios) than planned. The main reason was that many private owners transferred their holdings in excess of 200 ha to family members in parcels not exceeding 200 ha to avoid expropriation, a practice that was legally permitted (see Tables 8A and 8B). 5.5 The project benefitted from a relatively high priority on the part of the Government to rainfed prolects during its implementation compared to other hydraulic infrastructure projects underway in the 1980s. Although the project was not immune from budget constraints, the rate of implementation was considered satisfactory and generally on schedule until late 1987. Although only 3% of the drains and 7% of the roads remaining to be completed at the time, however, it became apparent that the project could not be completed on schedule (at the end of 1988) due to the Government's freeze on investment as part of its stabilization program. Two additional years were required. Fortunately, the delay did not have a serious effect on the project results because 98% of the total land destined for agriculture use had been under production since the mid-1980s and was benefitting from the infrastructure works by early 1988. Because of the unavoidable delay, the Bank agreed to extend the loan closing date by two years to December 31, 1990. It is important to note that even though government and private sector financial contributions were only about half of the original estimates, and 84% of the loan was canceled, the project was largely "completed" because of heavy investment in the "project" prior to loan effectiveness (and not covered by retroactive financing), and an underestimate of the private sector financial contribution to ultimate project costs. 5.6 It was anticipated that the cropping pattern would remain essentially the same as before the project -- sorghum during the main season and maize and beans in the late season. It was also contemplated that cotton and sunflower would become more important during the development period. In actuality, sorghum has completely dominated the cropping pattern ranging from 95% to 98% of the total area planted each year with the remainder being maize and beans. Although sunflower is well adapted, farmers are not interested in growing it because of the absence of suitable oil extraction plants in the area. Interestingly enough, a small amount of cotton began to appear in 1990, because of the declining profitability of sorghum, and in 1991 it rose dramatically to an estimated 28,000 ha in the project area, representing about 7% of the total area planted. Another crop that is gaining importance and new to the area is winter wheat, although lack of seed has been a constraint to its expansion. -6- 5.7 Technical assistance was carried out by the technicians assigned to support centers and field units under each one of the three Districts of Rural Development in a manner similar to that done throughout the country with the reorganization of SARH in 1985. The average coverage ratio (cropped area per technician) at the completion of the project was 6,500 ha. The original plan was to have a team of one extensionist and two technicians for every 5,000 ha. This density may have been ambitious for an agricultural area with a relatively simple cropping pattern, and budget constraints and restrictions on hiring new technicians affected the Districts' programs. On the other hand, part of the void was filled by extensionists attached to credit institutions (FIRA), as well as, more recently, private consultant companies (particularly for cotton). The technical assistance program of the Districts included: (a) advising producers in production and soil conservation related matters; (b) training and educating through special courses and mass-media; (c) field demonstrating and collaborating with research personnel in validation plots in farmers' fields; and (d) promoting and assisting in the group organization of producers (ejidatarios). Much of the training was conducted at the El Chapeno training center in the project area. 5.8 The Government fulfilled its commitment of increasing grain storage capacity by 270,000 tons through financing the construction of nine collection and storage centers strategically located throughout the project area. Their construction was completed in 1986 and placed in the hands of various ejido associations for operation. The private sector also has been very active as evidenced by the large number of small collection and storage facilities either recently constructed or in the process of construction. 5.9 In retrospect, the decision to divide the total project area into stages of development and to concentrate first in the central portion was a prudent one. This was the largest area and the one with the highest rainfall and best soils where most of the drainage works were located and consequently where the greatest benefits could be expected. 5.10 The prolect risks were correctly identified as institutional, financial and climatic. In the final analysis, however, these conditions resulted in limited adverse effects on the project. One additional risk that will be addressed later in this report is sustainability (see para. 7.1). 5.11 The risk of drought to agriculture in a semi-arid area without irrigation is unavoidable. Based on weather records, appraisal anticipated a dry year to occur every five years reducing sorghum yields by 50%. Between 1980 and 1990 there were no complete failures, but there were three dry years when yields fell below 2 t/ha (1983 with 1.4 t/ha, 1986 with 1.5 t/ha and 1989 with 1.5 t/ha). In addition, in 1983 only 47% of the sorghum planted was worth harvesting. The average yield for the project in the remaining eight years was 2.9 t/ha. 5.12 HiRh rainfall incidents in the project area included the Hurricane Barry (08/28/83 with 225 mm of rainfall in 10 hrs), and waterspouts in 09/12/83 (150 mm during 12 hrs), and 09/04/86 (208 mm during 5 hrs). Hurricane Gilbert passed through part of the project area on September 16, 1988 registering wind velocities that fluctuated between 220 and 260 km/hr and total rainfall was 412 mm, both during a period of six hours. Crop losses were insignificant since the sorghum had already been harvested, sold and transported out of the area. Damage to infrastructure was estimated at close -7- to US$1.0 million. 'These meteorological occurrehces should be taken into account in the design of the San Fernando II Project. 6. Proiect Results 6.1 The project achieved its objective of increasing crop productivity and production (mainly sorghum) in the project area of some 486,000 ha gross. The project reclaimed for crop production an additional 150,896 ha compared to the planned figure of 164,500 ha. This brought the total area under cultivation to 396,696 ha compared to the planned 404,500 ha. Drainage was provided on 358,000 ha versus 366,000 ha planned. These variances are minimal for a project of this kind, and are due mainly to minor adjustments in design as a result of actual experience gained during implementation involving some environmental restrictions to agricultural use of land. 6.2 The levels of sorghum production achieved with the project were satisfactory but generally inferior to those estimated at appraisal. Production was characterized by extreme annual variations due to the erratic fluctuations in crop yield in response to total rainfall and its distribution. Appraisal saw production estimates on a steadily inclining yield curve, beginning with 2.0 t/ha prior to the project and reaching 3.8 t/ha on clay soils, and 3.0 t/ha on loam soils at full development in Year 5. Actual yields did not follow this systematic pattern, primarily due to the inherent uncertainty caused by weather in any large scale rainfed area development project. Between 1980 and 1990, the highest yields were recorded in 1981 (4.3 t/ha), 1982 (3.6 t/ha), and 1985 (3.5 t/ha). The lowest occurred in 1983 (1.4 t/ha), 1986 (1.5 t/ha), and 1989 (1.5 t/ha). These three years were deficient in rainfall, both in quantities and distribution. Another factor affecting production was the area (number of hectares) planted to the crop, which also was slightly less than estimated at appraisal, but the overriding cause of the variance was productivity (yield) differences due to climate. Due to all of the above circumstances, the incremental production of sorghum at actual completion of the infrastructure works (end-1990) was 355,000 tons compared to appraisal estimate for that time of 557,000 tons: however, the impact of weather on production is well indicated by the fact that the highest incremental production between 1980 and 1990 was in fact in 1985 when it reached 792,000 tons (Table 5.B). In the long-term one would expect the average production increases of all crops to achieve appraisal targets. 6.3 The project has impacted on many aspects in its area of influence. The all-weather gravel road network has had a tremendous effect on the commercial as well as social environment. The roads have facilitated the transport of necessary agricultural inputs into the area and the transport of crops produced out of the area. They have positively affected the growth and welfare of the rural communities, enhancing education and medical services. Also, in conjunction with the project, the Government financed the infrastructure for supply of potable water. 6.4 The environment has improved with the project. The drainage system has alleviated the flooding of settlements, standing water in fields, swampy conditions, and soil salinity. A great improvement in health control of water-related diseases was achieved. A Bank reconnaissance mission sent to the project area following Hurricane Gilbert confirmed, after interviewing farmers, that if it had not been for the project's hydraulic infrastructure works, damage to fields and flooding of settlements would have been much worse. Greater improvements are needed in controlling wind erosion as addressed later (para. 7.5). Even with the project, some 13,000 ha of land is not suited for agriculture or cattle raising with much of it serving as a natural habitat and refuge for wildlife. 6.5 The increased agricultural activity and resettlement of additional farm families has been a stimulus for the formal organization of producers' associations, such as unions of ejidos. These types of associations represent the first step in promoting participation of the project beneficiaries in operation and maintenance, facilitating access to credit, and enhancing efficiency of technical assistance. The private sector has also responded by taking the initiative in constructing more grain collection and storage facilities. 6.6 The project's benefits (both quantitative and qualitative) were achieved at an average cost of US$337/ha considering a total base cost of US$133.53 million and 396,696 ha of total agricultural land. Average cost per family was US$8,638. Both average figures are considerably below appraisal estimates. 6.7 The Bank prepared a final exercise to check the possible ERR for the project and got a result of 24%, or 6% over the appraisal's projections (Table SF). CNA also checked the ERR in their draft ex-post evaluation including additional costs that the Bank did not include like expropriation of lands, CNA's administrative costs and the grain storage facilities (that the Bank refused to finance in the Project). CNA's ERR result was 17.4%. 7. Proiect Sustainability 7.1 Sustainability of an acceptable level of net benefits for future years will depend upon: (a) less dependence on the monoculture of sorghum; (b) an effective program of adequate maintenance of infrastructure; (c) the expansion of wind breaks and stabilizing dunes to minimize wind erosion; (d) alternative crop mixes and cultural practices to trap and conserve soil moisture; and (e) the expansion of agribusiness in the area. 7.2 Experience in the project has already exposed the high risk of planting sorghum as a single crop. The profitability of sorghum has declined in recent years due to the imbalance between the rising cost of production and the value of the crop. A vivid example is that up to 1983 it took a yield of just under 1 ton/ha to meet production costs; whereas, since then in most years it required 2 tons/ha. Already, producers and researchers are addressing this risk as evidenced by the introduction of alternative crops such as cotton and wheat in recent years. Adaptive research by the San Juan Research Center and the transfer of proven technology needs to be accelerated and demonstrated in order to offer producers viable alternatives to sorghum. 7.3 An area of concern has been a general decline in recent years of farmers applying the full technical package for sorghum production developed by the research station and accepted by the district technical committee. The package includes timing of operations, seed bed preparation, seed variety, fertilization, cultural practices, and disease and insect control. Part of the problem has been unfavorable price/cost relationships and the limited -9- availability of credit. All farmers use improved seeds but few apply fertilizers. There is a reluctance to apply fertilizer because of the risk of insufficient soil moisture to assure a yield response. This problem is related to soil preparation since the recommended practice of plowing and subsoiling to enhance the penetration of rainfall is not practiced by many farmers because their machinery is not in a condition to do these operations, or either they want to conserve it. Here, again, research must take the lead in examining low input farming systems along with alternative cropping patterns and rotation. 7.4 Two recent actions have taken place that should enhance the maintenance of the project's infrastructure. The first is the recent procurement by CNA, with Bank financing, of much needed additional equipment, such as front loaders, drag lines, motor graders and back-hoes. The second is the newly created Agency for Drainage Districts within CNA to implement the explicit policy of transferring responsibility for maintenance to the beneficiaries of the works. 7.5 Wind erosion has been a perennial problem in northern Tamaulipas State, and with the opening up of new land to agriculture in the project area, SARH recognized the need for establishing wind breaks. One approach was to leave natural vegetation belts or strips during the land clearing process. This was only moderately successful because of difficulty in supervising the operation and because they were used as a source of scarce firewood by neighboring families. Attention has turned now to establishing wind breaks with nursery grown seedlings through a cooperative program between SARH, the State Government, and the ejido associations. This program currently is being successfully implemented, and with the participation of the ejidos, the problem of cutting for fuel wood will diminish. 7.6 There has been, and still is, a pronounced absence of any type of value-added activity in the project area. It has been solely a producer of raw material (grain sorghum) that is sold in the project area and transported to other parts of the country where it is converted to animal products (pork and poultry). A major importer is the Monterrey area in the neighboring State of Nuevo Leon. Efforts to combine poultry raising with the collection and storage centers constructed by the Government and operated by the ejidos has proven unsuccessful. The main reason has been inadequate technical expertise and entrepreneurship capability on the part of the ejido associations. There is indication that this situation is improving since there is a growing number of examples where private entrepreneurs from outside the area are coming in and forming business partnerships with the ejidos for poultry production. 8. Bank Performance 8.1 The main strengths of the Bank were: (a) responsiveness to the Government's shift in policy towards rainfed agriculture; (b) greater involvement in project preparation; (c) early detection in project implementation of cost savings and support of actions to revise the project and to accelerate disbursements; and (d) immediate response to Government's request for assessment of damage caused by Hurricane Gilbert and financing for rehabilitation of damaged infrastructure works. A major weakness, which is shared by the Borrower, was the excessive time needed to complete the early stages of the project cycle -- 30 months from the Bank's first preparation - 10 - mission (12/79) to the completion of appraisal (second post-appraisal in 5/82), plus an additional eight months to project effectiveness. During this entire period, due to Government's high priority, SARH was implementing the project and had invested about US$60.0 million for civil works, studies and equipment, plus another US$30.0 million for indemnification. However, in line with the SAR recommendations, only US$5.0 million was approved for Bank retroactive financing from September 1, 1981, from a loan amount of US$138.4 million, i.e., much less than the 10% allowed under Bank guidelines. 8.2 With the exception of the handling of cost estimates, the Bank's input for appraisal was generally appropriate. Either through Bank staff or consultants, the areas of engineering, agriculture, economics and financial analysis were generally adequately covered. Appraisal dealt effectively with assessing the project's multiple components. However, a main shortcoming was that the unit costs for all types of civil works were overestimated, resulting in inflated project costs. 8.3 Supervision by the Bank was appropriately staffed and timely. Supervision by the Bank's engineer was very intense in the beginning -- three missions during 1983. Between 1984 and 1986, an agriculturalist and economist joined the engineer on missions about every six months. From 1987 onwards, missions were less frequent because of the advanced stage of project completion and Government restrictions on investments beyond the control of SARH. 8.4 Lessons for future Bank-financed rainfed infrastructure proiects are of the need for: (a) more conservative criteria for project design for sizing the storm drain canals capacity (in the Gulf area), which means design flood from 10 years and 24 hour duration instead of 7 years and 24 hours. The experience during implementation (Barry and Gilbert Hurricanes and two other heavy waterspouts--see para. 5.12), demonstrated that the system should be sized with more capacity. To construct the drains with double capacity would reflect only 13Z additional costs in the drainage system which was about 8% of the total project cost. This will be very important for the planned San Fernando II project. The future maintenance cleaning of the drains through drag lines and hydraulic excavators should be designed to add additional needed capacity; (b) comprehensive environmental assessment during project preparation and further monitoring, which in this case would have identified the need to control wind erosion, an aspect which SARH recognized during project implementation; (c) provision for reserving land for firewood production in land clearing projects in environments where fuel wood is scarce and where it is needed by rural families; (d) closer attention to operation and maintenance of infrastructure once completed by assuring that the organization responsible for it actually has the capacity to do the task; (e) in infrastructure projects with agriculture support service components, exploring with the Borrower a mechanism for assuring that loan disbursements against a particular category are reflected in the amount and timeliness of _ounterpart funds for that category; (f) closer attention to an assessment on the risk of droughts in rainfed projects, including the desirability of focussing on high-potential areas within a large project area -- San Fernando experience is that consistently increasing production is difficult to achieve due to the effect of a severe drought at least each year out of five; (g) assessing the risk implications of having huge projects like San Fernando concentrate on a single-crop; (h) more attention to establishing accurate yield and cost estimates; (i) establishing users' organization as a priority - 11 - from the beginning of a project; (j) careful evaluation of the likely actual implementation of land reform/titling legislation; and (k) identifying potential problems in utilizing retroactive financing. 9. Borrower Performance 9.1 The main strength of the Borrower's performance was SARH's and CNA's solid construction expertise for implementing the project, which was a reflection of many years of experience with infrastructure projects, and the continuity of this expertise despite institutional reorganizations and changes. Implementation was done economically and generally on schedule, at least until late in project implementation when the Government imposed investment restrictions. 9.2 The excessive time lag during project preparation could have been reduced if SARH had contracted out the work of completing the detailed surveys that the Bank required rather than continuing them by administration. Also, it was unfortunate that SARH could not agree to the Bank's urging for a project of smaller size during the preparation process rather than having made this decision subsequent to appraisal when it decided to phase project implementation differently in stages. This provoked further delays. 9.3 Project management responsible for implementing the infrastructure component was effective. It was less effective in the timely purchase of the necessary equipment for operation and maintenance -- the most significant procurement taking place at project completion. Project management by the districts for operation and maintenance was less effective, mainly because those assigned to this responsibility did not receive sufficient budget, equipment and human resources to enhance their capacity to carry out this function. Management by the districts of support services such as technical assistance and training was satisfactory, given the need to readjust to organizational changes and budget limitations for personnel and vehicles. Research management was responsive to the needs of the project. The San Juan Research Center (CIAGON) expanded its research program to include activities relevant to rainfed agriculture, although it was founded originally to serve irrigated agriculture. It developed a modest substation at El Canelo for this purpose. 9.4 In line with experience elsewhere in Mexico with public drainage and road systems, CNA management was not able to achieve cost recovery for operation and maintenance, although a socio-economic study of the project's beneficiaries was completed in 1986 to serve as its basis. Moreover, a - 12 - consensus supported by the recently approved Irrigation and Drainage Project is growing in Mexico which, with the intervention of the newly created Agency for Drainage Districts in CNA, should soon achieve a cost recovery. Also, the irrigation and drainage time-slice operation recently prepared by CNA, with Bank collaboration, addresses the issue of cost recovery of operation and maintenance of hydraulic infrastructure schemes on a national scale. 9.5 The Borrower was only moderately successful in improving loan disbursements for eligible expenditures in research, training and technical assistance, upon urging by the Bank, when it became apparent that expenditures in these components were not reflected in disbursements. An attempt was made to orient and inform the administrators of these programs with the required internal procedures to expedite disbursements. Similar problems existed in other Bank-financed hydraulic infrastructure projects. On the other hand, it must be recognized that there was no incentive at the project level to carry out the procedures since there was no relation between disbursements and counterpart funding support for the project. 9.6 Experience with the project has confirmed the importance of not overestimating the implementation capacity of the local unit responsible for civil works, including designing, preparing tender documents, contracting and supervising construction. By altering the implementation schedule on the basis of stages and zones, the local unit was able to execute the project successfully. Also, in future projects of this magnitude, an effort should be made to tender a small number of large contracts instead of many small ones. This would undoubtedly improve efficiency in the implementation. 9.7 Viewing the project in its entirety, it seems that there was a tendency for a construction-oriented bias in project design -- a bias not unique to the San Fernando Project, but also present in other hydraulic infrastructure projects with agriculture support service components. The project was an agricultural development project, and more support should have been directed to the use of the infrastructure. In this case, the role of the districts was clear, but unfortunately in times of economic stress there was a disproportionate share of support in favor of infrastructure over support services. 10. Prolect Relationship 10.1 Bank-Borrower relationships were very good during project preparation. There were differences of opinion during negotiation on matters of substance related to loan size, level of Bank financing and terms for project lending components, especially grain storage. Relations were good during project implementation. Borrower relations and field coordination with project-related executing agencies were normal. Institutional relations do not appear to have been a major constraint in project execution, even with the numerous institutional changes that occurred during project implementation. 11. Consulting Services 11.1 Consulting services were used during project preparation and appraisal especially for engineering and agronomy related components. These services were satisfactorily performed. During implementation, consultants - 13 - were used for two studies: "Movements and Storage of Grains" and "Socio- economic Survey of the Benefitted Population". The first was received by the Bank in September 1984 (nine months overdue). The principal recommendation that was useful to the Borrower was that all nine storage centers (270,000 tons total capacity) should be completed as soon as possible, thereby providing the impetus to continue with construction (although the Bank did not agree to finance this). 11.2 Although the socio-economic study, which was received by the Bank in September 1986 (also nine months overdue), fulfilled its purpose of establishing a reasonable charge to producers for operation and maintenance of roads and drains, project authorities were unsuccessful in implementing an acceptable mechanism to achieve cost recovery. Finally, the Bank urged the Borrower on many occasions to use consulting services for the preparation of the San Fernando II Feasibility Study. Only in February of 1991, did the Borrower communicate to the Bank the beginning of the San Fernando II Feasibility Study, which would take account of the implementation experience of the current project and possibly be prepared for Bank financing in the near future. 12. Proiect Documentation and Data 12.1 Legal Documents provided a useful framework for project implementation. Amendments, introduced during project implementation, were due to the deteriorating economic situation in the country during the middle and late 1980s, to the cost underrun of certain construction components, and to the reduction in drain and land clearing physical targets because of design updating and some environmental restrictions (i.e., some areas being unsuited for development, as noted above). These amendments in the Loan and Guarantee Agreements occurred in 1985, 1987 and 1988. The purpose of these changes was to adjust the amount of the Loan to the cost underrun and to facilitate disbursements. Closing date was extended two times from June 30, 1989 to June 30, 1990 and then to December 31, 1990. On balance, the Project seemed to have a normal number of required amendments which for the most part could not be easily foreseen during Appraisal, but which had a beneficial effect on project implementation. 12.2 The Staff Appraisal Report had a great deal of detail and provided an adequate framework, together with the legal documents, for project implementation. The only weak point would be the accuracy of the unit costs for civil works which were overestimated for certain components. 12.3 The Supervision Reports and other relevant documents available in the Bank provided most of the information necessary for the preparation of the PCR. However, data related to agricultural production and project benefits were incomplete and required additional attention during the final combined supervision/completion mission in June, 1991. .1 - 15 - PART II - PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE 1. Introduction 1.1 On behalf of the Borrower (NAPIN), the Comisi6n Nacional del Agua (CHA), Subdirecci6n General de Planeaci6n y Finanzas prepared a Project Completion Report dated September, 1991 and delivered a draft copy to the Bank by late January 1992. The full report, in Spanish, is in the project files. It contains a detailed description of the project implementation and of the Government's view on various aspects of the San Fernando Project. It presents data on costs, organization, technical assistance, agricultural production, agroeconomical data, O&M costs and ex-post economic evaluation. This section contains a summary of this report, focusing on the Government's view and the conclusions reached regarding its own and the Bank's performance and the lessons to be learned from the project. 2. Bank Performance 2.1 The Bank performed a regular, timely and satisfactory supervision role in the Project, following up and reviewing the construction progress and the implementation of complementary project actions. The supervision schedules enabled the project unit to: detect completion delays, adjust schedule deviation, and identify technical deficiencies and its feasible solutions. This role was always accomplished in coordination with the project implementation unit with the aim to achieve the original project objectives. 2.2 The final recommendation of the supervision mission for the project sustainability was related to: (a) maintenance of roads, drains, and structures; (b) soil conservation actions including wind brakes; (c) creation and strengthening of user organizations; (d) strengthening of environmental monitoring; (e) farmer training; and (f) availability of agricultural credit. 3. Government Performance 3.1 The project was implemented through enhanced rainfed agriculture with settlements, agrarian reform, roads and drainage networks, in three contiguous districts totaling a gross area of about 505,000 ha, and envisaging a total potential development of about 400,000 ha. 3.2 The loan became effective on March 4, 1983 and the project was planned to be completed on December 31, 1988 (six years); it was extended twice until December 31, 1990 as a result of some lack of budget funds during the late 80's, inflation, and the devaluation of the peso in relation to the dollar. By 1988 the construction components were mostly completed and the - 16 - delays were primarily on minor construction components. The agricultural benefits were always on schedule as a result of an effective answer of the private sector and beneficiaries. 3.3 Total project investment was MEX$447,170 million (1990 pesos) equivalent to US$156.9 million, including grainstorage facilities, SARH/CNA engineering and administration charges and taxes (nine of which were financed by the Bank). The total amount excluding those figures which were not financed by the Bank is about US$133 million. 3.4 The project was prepared by SARH's under the responsibility of the Subdirectorate of Programs and Specific Studies of the Undersecretariat of Hydraulic Infrastructure. 3.5 The project was designed under the legal framework of: (i) "Ley de Fomento Agropecuario" (Federal Law for Agriculture Development); (ii) "Ley de la Reforma Agraria" (Agrarian Reform Law); and (iii) "Ley Federal de Aguas" (Federal Water Law). This legal framework permitted the expropriation of agricultural lands marginally used or used for extensive beef cattle grazing and set the legal support to create the rainfed drainage districts. 3.6 San Fernando Drainage District was created by Presidential Act on May 12, 1980 and two days later the private cattle properties with more than 200 ha located inside the District perimeter were considered subject to expropriation for public utility. This was the first time in Mexico that a big agrarian reform project was implemented for rainfed agriculture. 4. Results Achieved 4.1 The information gathered in the Bank supervision reports and in the draft evaluation report from CNA provide a complete and updated picture of the project's effects and enables the identification of the following results: 4.2 Prolect conception, studies and designs: The project conceptual approach was fine to the soil-water-climate relations as well as human resources and socio-economical environment. The land reform component, land development as well as the infrastructure constructed and technical assistance provided, enabled a satisfactory result to the project. It should be noted some initial basic studies like the original topographical surveys were weak and had to be repeated to the adequate required level. Some quantities of drainage works, derived from these initial surveys, proved later to be exaggerated. 4.3 Construction: The civil works components were implemented through contractors. During the implementation period 1981-1990 the project had 272 contracts for construction, supplies and engineering services with 117 companies. The Government considers that this amount of contracts made supervision more difficult but enabled the participation of small and medium contractors. Total project construction cost, excluding land expropriations, taxes and SARH/CNA costs, was much less than the original SAR estimate (about 56% less). This was mainly a consequence of reduction on earth move, length of roads and drains, number of concrete structures and administrative buildings, and specially the reduction in land clearing from 155,000 ha to 59,745 ha. The main project construction components were almost completed by 1987 and totally completed in 1990. - 17 - 4.4 Agricultural Research: The agricultural research works were concentrated in sorghum in the areas of density of plants/hectare, fertilizer levels, soil preparation and conservation, weed control, insect control, and plant pathology. More recently efforts were dedicated also to crop diversification by preparing adapted technological packages for wheat, maize, beans and soybeans. 4.5 Agricultural Technical Assistance: The project area under agriculture increased from 130,000 ha in 1981 to 307,000 ha in 1991 at the same period the number of extension service technicians increased from 30 to 57. Soil conservation, tillage practices, fertilizers, seeding and insect control and plant pathology have been the main areas. 4.6 Grain Storage Facilities and Mechanization. A total static capacity of about 409,000 ton are installed in the project area out of which 270,000 were constructed by the Government (nine plants) under CONASUPO, BANRURAL and SARH agreement. The project area is fully mechanized. Currently 2,300 heavy tractors and 173 combines privately owned operate in the area. Contractors settled in the Bajo Bravo Irrigation District provide the gap of mechanized services. 4.7 The cost-benefit analysis indicates that the project benefit/cost relation at 12% is about 1.3 and the net present value of benefits is about MEX$117,664 million (US$392 million). The project EER according to CNA evaluation is about 17.4%. 4.8 The production volumes in the area increased from 593,000 ton in 1980 to 847,000 ton in 1990 corresponding to an increase in value of about US$46 million in the annual production, which reflects the increase of 112,000 ha of new areas and the technological improvement. Project sustainability will depend a great deal on crop diversification, technical assistance and agricultural research. Cotton and wheat are the crops that require the major support. 5. Recommendations and Lessons Learned 5.1 The project achieved most of its objectives despite some delays due to budget restrictions in the final years. These objectives reflect in the production increase, equity in land distribution through the agrarian reform, and the indicators of income and employment between the beneficiaries. In order to improve the results achieved and ensure sustainability in the future some recommendations and lessons learned will be useful for this project and others similar to come: 5.2 Prolect Preparation should include from the beginning adequate topographical surveys and data for the design of drainage systems. Cost estimates should be supported by a very consistent unit cost analysis. 5.3 Users organization should be developed from the beginning in order to take over the responsibilities of operation and maintenance of the infrastructure. 5.4 The transfer of technology from research to users, specially in the areas of soil management and soil and moisture conservation needs strengthening. - 18 - 5.5 The wind brakes program for protection against wind erosion should be incentivated with the farmer. 5.6 Environmental monitoring actions in the area should be strengthened in the areas of erosion, water table levels, salinity in low lands, water quality and pesticides. 5.7 Agricultural technological packages for crop diversification adopted to the area should be enhanced and updated especially for wheat, cotton, soy beans and others. - 19 - PART III: STATISTICAL INFORMATION I - 20 - TABLE 1 MEXlCO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) RELATED BANK LOANS LN.ICR. NUMBER TriLE . YEARS OF OPERATION 1462-ME 1/ Integrated Rural Development (PIDER II) 06/16/77-01/31/83 1553-ME 1/ Tropical Agricultural Development (PRODERITH I) 04/27/78-06130/84 1569-ME 1/ VI Agricultural Credit (FIRA) 05/16/78-06130/82 1891-ME 11 VIl Agricultural Credit (FIRA) 07/08180-12131/82 1945-ME 1/ Rainfed Agricultural Development Project (PLANAT) 03/02/81-06/30/87 2526-ME 2/ Chiapas Agricultural Development 04/04186-03131193 2658-ME 2/ Second Tropical Agricultural Development (PRODEFJITH II) 07/08/86-12/31/93 2859-ME 21 Agricultural Extension (PROCATI) 06/25/87-06/30/92 1/ Projects that preceded SAN FERNANDO. 2/ Projects that followed SAN FERNANDO. - 21 - TABLE 2 Page 1 of 2 MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) PROJECT TIME TABLE ITEM DATE PLANNED DATE REVISED DATE ACTUAL - Preparation 1 12/03/79 ---------------- 12/03/79 - Preparatlon 2 10/13/80 ---------------- 10113/80 - Appraisal Mission 08/06/81 ---------------- 08/06/81 - Loan Negotiations 05125/82 ---------------- 05/25182 - Board Approval 06/24/82 07/01/82 07/01/82 - Signature Date 09/05/82 ---------------- 09/05/82 - Date of Effectiveness 10/01/82 03/04/83 03/04183 - Closing Date 06/30/89 06/30/90 12/31/90 - Completion Date 12/31/88 06/30/90 12131/90 Source: Divisional Black Books and Project Timetables. COMMENTS: (lssues raised at each staoe of proiect cycle) Identification: Some delays but of minor effect. Project Preparation 1: Project scope, agricultural potential, land tenure situation and proposed infrastructure works. Project Preparation 2: Justification for extensive drainage and road components and criteria for their engineering design in the absence of detailed soil and topographical survey information. Need for technical assistance and support from research. Pre-appraisal: Above mentioned issues were resolved with a full feasibility study In hand, Including a comprehensive soil survey. Appraisal: Equate the schedule for land expropriation and distribution with the project implementation schedule. Policy for grain storage and marketing. Post - Appraisal 1 Unexpected decision by SARH to change the project by dividing the total area Into three distinct regions and implementing the project in three phases, each taking about two and a half years, thus necessiating project revision. Post - Appraisal 2: Review of the status of final designs for the first year of project Implementation which confirmed that they would be ready by Board presentation. Date of Effectiveness: The date was revised due to the delays on the full compliance of the deliveries of final designs and bidding documents. These designs should be reviewed to reduce quantities of infrastructure works. MEXICO SAN FERNANDO RAINFED AGRICULTURAL-DEVELOPMENT PROJECT (Loan 2191 -ME Prolect Schedule QUARTER 1121341 234123 4 1 3 1 2 1314 1 21 2 1334 12 13 14 1 12 13 41 234 1 12 13 14 YEAR 1 9 7 9 1 9 8 0 1 9 8 1 1 9 8 2 1 9 8 3 1 9 8 4 1 9 8 5 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 0 PREPARATION APPRAISAL MISSION LOAN NEGOTIATIOINS BOARD APPROVAL SIGNA'TURE DATE DATE OF EFFECTIVENESS COMPLETION DATE CLOSING DATE YEAR 1 9 7 9 1 9 8 0 1 9 8 1 1 9 8 2 1 9 8 3 1 9 8 4 1 9 8 5 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 0 QUARTER 1 2 1314 1 21314 1 12131411 12314 1 121314 jl12 13 14 1 12 13 14 1 12 13 4 1 12 13 14 1 12 13 14111 EI lj 2]13 14 SCHEDULED ACTUAL MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENT (US$ million) FISCAL YEARS 1983 1984 1985 1986 1987 1988 Appraisal Estimate Annual 7.0 8.0 12.0 25.0 30.0 56.4 Cumulative 7.0 15.0 27.0 52.0 82.0 138.4 Actual Disbursement 2.05 4.92 15.87 21.54 22.63 - Actual as %of Estimate 29% 33% 59% 41% 28% - Date of Final Disbursement: 12/01/86 Amount Cancelled: US$ 115.775 million Repayments (as of 02 30 91) USS 18.233 million m :W MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) ANNUAL FINANCED EXPENDITURES BY INVESTMENT CATEGORY (US$ 000) CALENDAR YEARS INVESTMENT CATEGORY 1983 1984 1985 1986 1987 1988 1989 1990 1991 TOTAL 1. Civil Works: (Earthmoving & Building) 1,479 2.950 3.537 1.669 998 392 398 1,884 826 14.134 2. Equipment - - - - - - - - 3,348 3.348 3. Technical Assistance, Tralning and O & M - - 86 338 613 413 - 937 710 3.098 4. Front-end Fee 2.045 2,045 TOTAL CATEGORIES 3.524 2.950 3.623 2.007 1.611 806 398 2.821 4.884 22.625 Source: World Bank Disbursement Department. NOTE: USS 22.6 million were fully disbursed by 12/01/86. which Include USS 10.7 million drawn by the Borrower on special account which have been documented against expenditures to 1991. :>1 MaEXCO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) CUMULATIVE FINANCED EXPENDITURES BY INVESTMENT CATEGORY (USS 000) CALENDAR YEARS 1983 1984 1985 1986 1987 1988 1989 1990 1991 1. Civil Works: (Earthmoving&Building) 1,479 4.429 7,966 9,635 10,634 11.026 11.424 13,308 14,134 2. Equipment - - - - - - - - 3,348 3. Tqchnical Assistance, Training and 0 & M - - 86 424 1,037 1,450 1.450 2,388 3,098 4. Front-end Fee 2,045 2,045 2.045 2,045 2,045 2,045 2,045 2,045 2.045 TOTUAL CATEGORIES 3,524 6.475 10.097 12,105 13.716 14,522 14.920 17,741 22.625 Source: World Bank Disbursement Department. NOTE: US$ 22.6 mIllion were fully disbursed by 12/01/86, which Include US$ 10.7 million drawn by the Borrower on special account which have been documented against expendfures to 1991. tTl SAN FERNANDO (LOAN 2191-ME) CUMULATIVE FINANCED EXPEND. BY CATEGORY 25000 z 0 F- Co10000 / oF ' E ---r-~~~-~ ~-~-~-~ ~ ~ ~ ~--------------------------- 1 983 i1984 1985 1986 1987 1988 1989 1990 1 991 CALENDAR YEARS |CMviWork Eqjipment ---TechAss.,Tmg6,0&M Total > : ,i M ci)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~c MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) PROJECT COSTS (In US$ million) APPRAISAL ESTIMATE ACTUAL COST at bl INVESI}IENT CATEGORY (06/0V82) LOCAL FOREIGN TOTAL LOCAL FOREIGN TOTAL 1. Civil Works (Earthmoving) 90.64 70.82 161.46 67.17 13.10 80.28 2. Civil Works (Buildings) 3.59 0.97 4.56 1.97 0.91 2.88 3. Equipment 1.61 12.21 13.82 1.38 3.40 4.78 M 4. Training 5.11 0.13 5.25 0.25 0.29 0.55 5. Studies 3.59 0.21 3.79 2.17 0.91 3.08 6. Right-of-Way 3.45 - 3.45 38.16 - 38.16 c/ 7. Operation and Maintenance 36.14 7.64 43.78 1.84 1.95 3.79 TOTAL BASE COST 144.14 91.98 236.12 112.95 20.58 133.53 Physical Contingencies 21.18 13.87 35.04 Price Contingencies 47.06 30.45 77.52 TOTAL PROJECT COSTS 212.38 136.30 348.68 112.95 20.58 133.53 Front-end Fee 2.05 2.05 - 2.05 2.05 Total Financing Required 212.38 138.34 350.72 112.95 22.62 135.57 al Actual costs provided by CNA, in current USS. b/ Local costs are calculated by subtracting World Bank total actual disbursements from total actual project expenditures. c/ Figure Includes IndemnificatIon for expropriation of private land for right-of-way and also for land reform and any Improvements on the land including bush clearing. MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) PROJECT FINANCING (In US$ million) Planned % of First % of Second % of Final % of Source Loan Total Revision Total Revision Total al Total Comments Agreement Financing Financing Financing FInancing _____________________ 09/05/82 01/14/85 01/15/87 04/26/91 IBRD 1. Civil Works: (Earthmoving& Building) 106.0 306 32.4 15 18.1 139 14.1 109 2. Equipment 14.0 4% 10.3 5 - _ 3.3 29 X 3. Technical Assistance, Training and 0 & M 5.5 26 1.6 1 2.5 26 3.1 2f 4. Front-end Fee 2.0 1% 2.0 1 2.0 2f 2.0 2f 5. Unallocated 10.9 3% 2.1 1% - - _ b/ c/ TOTAL IBRD 138.4 394 48.4 22s 22.6 179 22.6 17f d/ GOM & BENEFICIARIES 212.3 61% 170.2 7896 112.9 83% 112.9 839 at TOTAL FINANCING 350.7 10z 218.6 1 135.6 10e 135.6 1 a) Final amounts including those documented through the special account. bl US$ 90 million were cancelled from the Bank loan on 01/14/85. c/ An additional US$ 25.6 million from the Bank loan were cancelled on 01/15/87. d/ From the total Bank loan USS 10.7 mililon have been drawn on the special account which have been fully documented as of 04/26/1991. e/ GOM and Beneficiaries contributions are calculated by subtracting World Bank total actual disbursements Irom actual project expenditures. t MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) MAIN PROJECT COSTS FIGURES PROVIDED BY CNA COMPONENETS CALENDAR YEARS OF IMPLEMENTATION TOTAL 1979 1980 1U91 1982 1983 1984 1965 1916 1907 lo8 1969 1990 1. CMI Worke (Ink. Wicturs) 1i (000US$) 219 13,883 2S.912 12,076 5.767 5.970 7,605 3.473 2,066 1.006 666 1,411 60,279 (/la, 5.4Hx$) 5 319 64S So0 692 1,03 1,734 1,997 2,Ea 229 2,199 3,99 126M 2. CM Works (Buildings) V (000 US$) - - - 2,292 692 - - - - - _ - 2,664 (millin, MEXS) - - - 110 71 - - - l _ - _ 5I1 3. Equipmsnt 3 (000U S$) - - - - - 693 738 - - - 238 3,114 4.763 (eijlwj MEKS) - - - - - 116 16J -, - - 59o 5,am ,65 4. Trnding (000 US$) - - 92 63 72 - _ _ _ _ 547 (dHini11 EX$) - - 19 10 12 - - - - - 41 5. Topograpiml Studies (000 US$) 132 2.065 $48 38 _ _ _ _ _ _ _ *.012 (wllin AfEX) 3 47 21 2 - - - - - - - 73 6. Rigs--Way (000 US$) - - 22,898 7,292 4,297 1,310 1,946 151 70 - 161 15 3*,159 (mnillion MES) - - 52 350 516 220 444 57 95 - 447 42 2.773 7.0&M41 (000 US$) - 791 1.246 867 209 149 136 257 152 60 99 25 3,791 OaiIIireEX$) - I5 31 32 25 25 31 145 I J 13 246 TOTAL (000 US$) 351 16,740 50.904 22.75, 10,48 8.193 10.425 3.JU1 2.290 1,065 1,400 4,565 133,525 (milkuMN * 355 1,m 1,092 1,314 1,376 2xm 2,2J2 3,101 2429 3,451 12,29 31,997 Exchange Raise: MEX$/US$ 23 23 25 46 120 168 228 575 1.354 2,281 2.470 2.832 1ICMI works fnbradructure) Includes land clein, drains, roads. sdnucte. plilines, *ngineering and adminisualUn ces . 2/ CMI works (buNldi) ncludecs oled oflicis. tralning csnter, and rserch enher . 3 Includes repairs of exisng quipment. 40 O U also Includes matrials and height. Nate: Figures have ben rounded. SAN FERNANDO (LOAN 2191-ME) PROJECT ANNUAL COSTS PROVIDED BY CNA 30,0 25,000F 0 20.000e 0 Co .d 15. 0-1 o 10.000-- 5,000 _ 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 YEAR Civil Works (Infr.) Civil Works(Build.) S Equipment | -3 | Training Studies EN 0 & M rt f) - 31 - TABLE SA MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) PROJECT RESULTS: DIRECT BENEFITS APPRAISAL REVISED 1/ ACTUAL 2/ ACTUAL ESTIMATE as% of INDICATORS UNIT 06102182 01/14/85 12131/90 REVISED LAND CLEARING Area cleared ha 155,000 143,000 132.135 3/ 92 INFRASTRUCTURE Surface drainage km 884 750 665 89 Area covered by drainage ha 366,000 366,000 358,000 98 Gravel-surfaced roads km 1,278 790 785 99 Small hydralic structures unit NS 41 2,717 2.702 99 O &Mcenters unit 3 3 1 33 Research centers unit 1 1 1 100 Training centers unit 1 1 1 100 Graln storage centers unit NS 9 9 100 Major bridges unit - 8 8 100 EQUIPMENT For drains and road maintenance unit 122 49 39 5/ 80 WINDBREAKS km Natural shelter belts km NS 1,200 1t200 61 100 Cultivated wind brakes km 400 122 31 TRAINING FOR NEW SETTLERS No. 8,200 4,050 4,050 100 STUDIES Grain transportation/ storage unit 1 1 1 100 Socio-economic unit 1 1 1 100 AREA UNDER PRODUCnON ha 404,500 404.500 396,696 7/ 98 RECLAIMED AREA (NEW) ha 164,500 164,500 150.896 7/ 92 11 After joint Bank-GOM review in 1984 of project components, quantities of work and costs, after which the project entered the special action program (01/14/85). 21 Final figures of project completion after some adjustments In design as a result of actual experience gained during implementation. 31 Final fIgure, of which the project cleared 59,735 ha. the private owners about 73,000 ha and natural vegetation left for soil conservation and environmental reasons. 4/ NS means not specified. 5/ Of which 20 units with bank financing . The missing units are compactors and dump trucks. 6/ Windbreaks Include 1,200 km of natural vegetatlon strips that were left standing after land clearing and 122 km that have been planted. An additional 278 km are to be planted. 71 Final figures as a consequence of some restrictions imposed by environmental conditions atfecting agricultural use of land. Source: Divisional Black Books. - 32 - TABLE SB SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) AGRICULTURAL PRODUCTnON BENEFITS SORGHUM YIELD PRODUCTION (ton/ha) (tons) APPRAISAL 1/ ACTUAL APPRAISAL 11 ACTUAL Without Project 2.00 2.00 572,528 440,000 1980 - 2.49 - 589,835 1981 _ 4.26 - 1,121,107 1982 - 3.58 - 960,666 1983 2.16 2/ 1.37 568,324 213,451 1984 2.32 2.31 593,723 688,778 1985 2.76 3.48 675,434 1,232,326 1986 3.23 1.45 808,865 367,801 1987 3.60 2.61 959,601 954,374 1988 3.60 2.30 1,064,024 833,160 1989 3.60 1.52 1,116,816 458,985 1990 3.60 2.27 1,129,216 794,632 1/ Weighted average based on 75% clay soils and 25% loam soils. 2/ Appraisal considered the first project year as t983, however, SARH began construction In 1979 and continued through 1980-82 with Government financing as reported In para. 8.1 . MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) SUPPORT DATA FOR BENEFIT STREAM H A PRODUCTION E A COST OF PRODUCTION PRODUCTION VALUES MAIN A R X A (US$000) CROPS R E C T A F CALENDAR V A H E 0 A YEARS OF E A S TO THE FARMERS J C SOCIAL GROSS VALUE NET VALUES NET INCREMENTAL OPERATION S TOTAL INCREMENTAL N U T VALUE WITH PROJECT T 4 G . SO U4 E F E TR D VOLUME A 1 TO ADJUSTED TO TO ADJUSTED TO TO ADJUSTED TO C E FARMERS INTERNATIONAL FARMERS INTERNATIONAL FARMERS INTERNATIONAL T MEXS N PRICES PRICES PRICES 0 PER T (000 ha) (000 tons) (000 tons) R U8S MEXS milln.) (US$ 000) 6/ (USS 000) 7/ 7! 71 1980 1/ SORGHUM 237 690 40 0.07 23 672 29,204 1.20 35,090 74,370 70,002 45,185 40,900 3,048 2,760 1981 1/ SORGHUM 283 1.121 571 0.51 25 1.028 41.967 1.11 46,503 179.837 141,651 137.809 95.149 70.226 48.465 1082 I/ SORGHUM 268 961 411 0.43 48 1,107 23.087 1.46 33.764 95,606 104,093 72.540 70.330 31,011 30.0e6 w 1983 11 SORGHUM 15 214 (337) (1.68) 120 3.712 30,933 1.19 36,847 20.100 27.484 (10,833) (9.303) (10.833) (9.303) 1984 11 SORGHUM 298 689 139 0.20 1e8 11.134 66,276 1.14 75,354 80.357 81,408 14.082 6,054 2.838 1.220 1985 1 SORGHUM 355 1.232 682 0.55 228 16.677 73,144 1.06 77,679 155,122 126,938 81.978 49.259 45,390 27.274 1986 11 SORGHUM 253 388 (182) (0.50) 575 21,034 37,624 1.20 44,968 28,145 30.312 (9,479) (14.,54) (9,479) (14,654) 1987 11 SORGHUM 365 954 404 0.42 1.354 83,146 61.408 1.42 87,264 79.649 69,445 18.241 (17.818) 7,729 (7,550) 1988 11 SORGHUU 361 833 283 0.34 2,281 144,385 63,290 1.20 75,956 73,661 82,030 10.362 6.081 3,622 2.067 1989 11 SORGHUM 303 459 (91) (0.20) 2.470 180,754 73,002 1.18 86,098 59.320 48,629 (13.683) (37.460) (13,683) (37,469) 1990 11 SORGHUM 350 795 245 0.31 2,832 230.437 81,369 1.00 81,309 101,013 83,901 19,43 2,532 6.047 779 COTTON NS NS NS - NS NS - NS NS NS NS NS NS NS 1901 2/ SORGHUM 342 854 304 0.36 3,000 227,176 76,725 1.00 75.725 118,176 90.173 42,451 14,448 15,111 5,143 COTTON 28 49 49 1.00 42,570 14,190 14,190 29.400 76.031 15,210 81,841 15.210 61.841 WBTOTAL ::6 - 9.118 2.518 671,207 : 770.810 1,094.754 1,038,104 423.547 267f*4 166,137 t10,680 1992-95 31 SORGHUM 314 785 235 0.30 3,000 208,927 89,642 1.00 69.642 99,486 82,930 29.844 13,287 8,945 3.982 COTTON 56 97 97 1.00 84,290 28,097 28,097 58.213 150,611 30.117 122,414 30 117 122.414 TOTAL . _ _4,947 12,456 S,es : . .......... .................. _ ...06i,63 _ 1,106,120 1,10tO297 . -1,673,948 003761 : 4 -, 8 6 6...6. 23 . WN'876 1/ Reported values orom 1080 until 1990. 2/ Best esdhtate asofJune. 1991. 31 Projection vlueos kt 1992 and *h r. 41 Incremental benelt tream excluded the 550,000 tons o sorghum yearly production without the project. H 51 Vale Insdde parentheses are negatIw benefits. > a/ The correcion fator is based on the subsidies br brtlizers (urea and phosphaet) weighted as 60% of the hiput costs. An average ol both ftetilizers was considewed. 71 International prices usd or theso adjustments re U.S. Gull Port prices lot orghum and U.S. 10 Markets prIces or conon. NS Not signltfcant. MEXICO SAIN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) ECONOMIC ANALYSIS (USS '000) CALENDAR YEAR 1970 1980 1051 1982 1983 1984 1965 1986 1987 1963 1909 1ogo 1991 19925 k COSTS INVESTMENT COSTS 351 16,740 50.904 22,758 10,946 8,193 10.425 3.881 , 2,290 1.0a5 1,400 4,665 OPERATING COSTS - - - 250 500 500 750 750 1,000 1,250 1.500 1,600 1,500 1,500 TOTALCOSTS 351 16,740 50.904 23,008 11,443 8,893 11.175 4.631 3.290 2,315 2.906 6,065 1.500 1,600 a. BENEFITS - 2.760 41,465 30.0e8 (9.383) 1,220 27.274 (14,654) (7,650) 2,087 (37,469) 779 60,984 126.397 TOTAL BENEFITS - 2,760 46.465 30,068 (9,363) 1.220 27.274 (14,654) (7,550) 2.067 (37.469 779 66.984 126.397 t C. NET BENEFITS (351) (13.9s0) (2,439) 7,058 (20,811) (7.473) 16.o00 (19.285) (10,340) (2i8) (40.3761 (5.266) 65.484 124.197 ECONOMIC IRR 23.91% Ln, W- MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) FINANCIAL ANALYSIS (US$ '000) CALENDAR YEAR 1970 1060 lo61 12 103 19e4 1tl 10s6 1067 In2U 1m im IWi 1tl62-6 A. COSTS INVESTMENT COSTS 351 16,740 50.904 22.750 10.941 J,103 10.425 3.661 2.200 1.005 1.406 4.5,6 OPERATING COSTS - - - 250 600 600 750 750 1,000 1,260 3.600 36500 360 2.600 TOTAL COSTS 351 18,740 50,e04 23.008 11.448 6.693 11.175 4,631 3.200 2.315 4.,6 6.066 3.500 3.600 LA) B. BENEFITS - 3,046 70.228 31,011 (10.633) 2.636 45.390 (9.479) 7.720 3.522 (13.863 6.047 30.321 36.061 TOTAL BENEFITS - 3.046 70.226 31,011 (10."3 26.838 45.390 (9.479) 7.72 3.522 (13.6t3) 6.047 30.321 36.061 C. MET BENEFITS (351) (13.62 10.322 6.003 (22.26) (5.6M 34.215 (14.110) 4.436 167 (16.5" (2.616) 26.621 86.661 FINANCIAL IRR 41.60% tit - 36 - TABLE SF MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) INTERNAL RATE OF RETURN APPRAISAL ESTIMATE ACTUAL Economic Rate of Retum 15.0% 23.9% I/ Finmncial Rate of Retum 29.9% 41.5% V CNA evaluated the project ERR as about 17.4%. In this exercise the cost stroam included grain storage facilities and cngincering and administration costs (some USS5 mlillon morc). - 37 - TABLE S mcoCO SAN t NANDO RWNilD AGNCULTUNAL DlVILOWtPMgT PtiECT ILown 219ftM-i STATUS OF LEGAL COVENANTS DEADUNE GUVAANTEE FOR AGREEMtENT SUBJECT COMPUANCE STATUS COVENANT Section 3.03 Except * the Bank sh"ll otherwvir segee procurement of the Closirg drate Complied with goods nd civil works to be financed out of the proceeds of the Loan shell be governed by the provisionr of Schedule 2 to thee Agreement. - Section 3.05 b) The GOM shall mer ntin or came to be maintained records Naem Compied with tbl adequate to record the progras of the Proiact tincludting its coat). Cil0 enablh the Banks accredited repreenuatives to visit the tacikties end construction site included in the Project an ta examine the good financed out of the proceeds of *th Loan, and any relevant records and documents; and tiiii turrish or casc to be furnished to the Bank ruch other intorrmation a the lank sl. from time to time, resonably request cone rning the Project, its cost. the expenditure of proceeds of the Loan end the goode and servies financed out of such proee ds. * Section 3.08 Furnish to the Bank e study qn grain investment and storage. 12/31183 Received by the Bank in 09-16-84 - Section 3.09 The GOM shotl continue to take such measur _ shall be AnruValy Complied with necssary or advisable to ewnure that the farmers in the Project ware will be provided with such short, medium-. end long-tarm credit as anrd vwhen requ9red to utilize adequately tho facilities end rrrvices ineluded in the Project. - Section 3.09 Promptly after completion of the Project, but in any event not After project Comdplians (l later than one yea after the Closing Daes or such later date _ completion ongoIng may be agroed for the purpcee between the GOM and the Sank. prepre fd fturnish to the Sank a report on the execution nd initial operation of the Project, its toot end benrfits ad on the aceomplishment of the purposes of the Loan. - Section 4.02 The GOM shell msintain or cauer to be maintained separate Annwuly Complied with (a) accounts adequate to reflect In accordance with conrstently rmaintainrd sound accounting practice the resources nd expenditures, in respect of the Project, of the departments or agencie of the GOM responrible for carrying out the Project or any part thereof. - Section 4.02 The GOM shall annuelly, withn one year after the end of the year Annually Complied with Iel concerned. furresh to the Bank a summery statement of such account. Section 4.03 The GOM Ihall carry out the Project drecribed in Schedule I to Annually Complied with this Agreement, ecting through SARH. with due dilignce end ftficiency and in conformity with sournd enineering. egriculturel, economic, administrative rnd financial practices, arnd shall provide, promptly as needed, the funds, facilities. serviea, and othwr resources required for the purpose. Section 4.03 Recovery of Od M coats. Not complied. but since to) completion, Programs is being made - Section 4.03 Complete a eocioionomic study to establish O&M chargve 12/31/85 Complied in September, Ib) 1966 Section 4.04 Take such adtione as shell be neessary to recover the operation Not complied, but since il) and ma.ntenence costs, and as much as practicable of the completion, program is nvestm.nt cost, ol the droanage nd adjacent rood facilities in the being made Project wea relerred to n Schedule I to ths Agreement, in accordance with the recommendatione of the Study raefrred to in paragraph Ib) of this Section. - 38 - TABLE 7A MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) USE OF STAFF RESOURCES STAFF INPUTS (WEEKS) . . PLANNED REVISED FiNAL TOTAL STAGE OF PROJECT CYCLE H.O. FIELD TOTAL H.O. FIELD Through Appraisal 8.2 14.6 22.8 10.2 12.6 22.8 Appraisal Through Board Approval Through Effectiveness 87.1 19.1 106.2 86.9 19.3 106.2 Supervision 7.0 40.4 47.4 36.3 30.7 67.0 TOTAL 102.3 74.1 176.4 133.4 62.6 196.0 Source: Bank MIS and Divisional Black Books. - 39 - TABLE 7B MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) USE OF STAFF RESOURCES MISSIONS MISSION DATE Date No. of Man/days Specializations Performance Type of Comments (molyr) Persons in field represented rating Problems Preparation 1 12V79 4 56 a,2c,f na 1/ Preparation 2 10/80 4 32 a,b,c,e na Preappraisal 06/81 2 14 a,c na 1/ Appraisal 1 08181 5 100 a,b,c,2t na Appraisal 2 10/81 1 10 c na Appraisal 3 01/82 1 4 a na Post-appraisal 1 02/82 1 7 b na Post-appraisal 2 05/82 1 8 c na Supervkion 1 09/83 1 5 c na Supervlsion 2 10/83 1 8 c 2 F Supervision 3 12/83 1 5 c /x Supervision 4 03/84 3 36 a,b,c 3 F,M.T Supervision 5 08/84 2 18 b,c 2 F.M Supervision 6 02/85 1 5 a 2 F,M Supervision 7 08185 3 45 a,b,c 1 Supervision 8 05/86 2 22 a,c 1 Supervislon 9 02187 1 15 a 1 Supervision 10 12/87 1 4 a 1 Supervision 11 09/88 1 18 a 1 1/ Supervision 12 06189 2 26 a.b 1 Supervision 13 08/90 3 26 a,2c 1 TOTAL 41 464 OTHER PROJECT DATA Borrower: Nacional Financlera, SA Executive Agency: SARH -CNA / Secretaria de Agricultura y Rescursos Hidraulicos - Comision Nacional del Agua Fiscal Year: January 1 -December 31 Name of Currency (abbreviation): Mexican Pesos (Mex$) Currency Exchange Rate: AppraisalYearAverage: (1981-83) US$1.00 MEX$ 40.45 Intervening Year Average: (1 983-89) US$1.00 - MEX$ 1038.49 Last Year Average: (1990) USS1.00 - MEX$ 2812.60 a * agriculturist; b . economist; c a engineer; d - financial analyst; * * deputy divislon chief. f consultant 1'problem tre or minor problems: 2-moderate problems: 3- major problems; 4 major problems, objectives will not be met. F- Financial: M * managerial; T - Technical: P . Political; and 0 a other overal 1/ Patial in conjunction wlth other projWcs xi Report not in file - 40 - TABLE BA MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) LAND TENTURE STATUS AREA (Hectares) BEFORE AFrTER PROJECT .. . PROJECT 11 ACTUAL APPRAISAL Ejidos 133.066 198,175 287,116 Private Owners 310,081 237,222 3/ 120,244 Colonias 18,635 18,634 19,656 SARH - 2,248 Others 21 24,658 30.161 59,596 TOTAL 486t440 486.440 486.612 1l Some figures are different from those In the Appraisal Report, which were the best estimates at the time. These figures are based on actual detailed count shortly after appraisal. 2/ nfrastructure works, urban areas, environmental protection, bodies of water, etc. 31 Of which 10,523 ha represents private land expropriated and indemnified in kind to private cattlemen. - 41 - TABLE 8A Chart 1 LAND TENTURE STATUS (AREA %) BEFORE PROJECT At rfra, on.(n.Cs 4 AFTER PROJECT (ACTUAL) SARM (Q#l~ Calornas (ca) Prtvht Owners (4a(%) s E E * (~~~(2% MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191 -Mg) LAND TENTURE STATUS FAMILIES NUMBER OF FAMIUES AREA PER FAMILY (Hectares) BEFORE AFTER PROJECT BEFORE AFTER PROJECT PROJECT 1/ PROJECT 1/ ACTUAL APPRAISAL ACTUAL APPRAISAL Ejldos 6.771 10.822 13,838 19.65 18.31 20.75 Private Owners 1,926 3.475 1.926 161.00 68.27 62.41 Colonlas 1.161 1.161 1.356 16.05 16.05 14.05 TOTAL 9,858 15,458 17.120 1/ Some figures are different from those in the Appraisal Report, which were the best estimates at the time. These figures are based on actual detailed count shortly after appraisal. ao - hs3 - TABLE8C MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) LAND USE PATTERN BEFORE PROJECT AFTER PROJECT (1979) (1990) Area % of Area % of (ha.) Total (ha.) Total 1. Total Area In Crops 239,931 49.3 396.696 81.6 2. Land for LIvestock 1/ 174,207 35.8 61,734 12.7 3. Land Recently Cleared 42,184 8.7 400 0.1 4. Idle Land 6.000 1.2 700 0.1 5. Non - Arable Land 13,370 2.7 13,370 2.7 6. Others 2/ 10,830 2.2 13,540 2.8 TOTAL 486.522 100.0 486,440 100.0 Source: CNA report. 1/ Land In brush, natural and cultivated pastures 2/ Bodies of water, urban areas, roads, drains, etc. - 44 - TABTF P.C LAND USE PATTERN (AREA %) Chart 1 BEFORE PROJECT (1979) 'wo cs) MLKeqcw_"*n) A-g nui CtUPS (4&3%A) W" -Ari LNfl(1CZ AFTER PROJECT (1990) Lai ic LIu~ok (2.W Laid (ML%) Land ACuWIgr CSmwued (M.%) w lor Lbvock (IXt O% Non- A 'be Land(2.\\ Odwe (23) km m cirops (31.5%) - 45 - TABLE 9 MEXICO SAN FERNANDO RAINFED AGRICULTURAL DEVELOPMENT PROJECT (Loan 2191-ME) STUDIES Purpose as Defined Status Impact of at Appraisal Study 1. GRAIN STORAGE STUDY To resolve storage and grain Received by Bank Support decisions for sizing, movement problems encountered In September 1984. location and financing the nine and anticipated when the project grain storage facilities with is implemented. total capacity of 270,000 tons. 2. SAN FERNANDO II FEASIBIUTY STUDY To prepare a feasibility study for On-going. Will permit the assessment of a follow-on project In an area of Initiated in March, 1991. possible expansion of the about 400,000 ha to the south of project. the project just completed. 3. SOCIO - ECONOMIC STUDY To provide the basis of cost recovery Received by Bank Detailed information about for 0 & M. In September, 1986. beneficiaries, capacity to pay for 0 & M. >_ ))Mc Allen D-.'\ U NI T E D STAT ES rho, Drdo, \ U NIED S T A T E S R no , 'ae,Hd.1 0o 3 1,. .o,dud .R.. l'.- ^; 9 ffi N 4 W~~o Of/ X I . t _ e OGrmo '6 SAN FERNANDO RAINFED - 1 ;= < i ffi11-72bStBlo
Groupe de la Banque mondiale · Project Completion Report
Mexico - San Fernando Rainfed Agricultural Development Project
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Informations clés
Organisation
Groupe de la Banque mondiale
Type de document
Project Completion Report
Pays
Mexique
Source
Banque mondiale